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Bankruptcy 101

Property not included in Bankruptcy

Upon the filing of bankruptcy, federal law creates a “bankruptcy estate” where all of the debtor’s assets are put in, in order to determine what is going to be sold and paid to creditors. The debtor is allowed to exempt (keep) and take things out of bankruptcy in order for the Chapter 7 trustee not to take it.

Those exemptions have limits and it is determined based on state law.


In California Bankruptcy law allows you to exempt and keep the following assets.  Please note, while there are two different exemption systems (703 and 704) in almost all cases 703 is an applicable exemption.   Below is a list of 703 Exemption


The home exemption protects a certain amount of equity in your principal residence including a mobile home, boat, stock cooperative, community apartment, planned development or condominium.  You can exempt: 

  1. up to: $75,000 if single and not disabled; or  

  2. $100,000 if family and at least one family member has no interest in the home; or

  3. $175,000 if 65 or older or if physically or mentally disabled; or

  4. $175,000 if creditors are seeking to force the sale of your home and you are either (a) 55 or older, single and earn under $25,000 per year, or (b) 55 or older, married and earn under $35,000 per year.

Motor Vehicle

Up to $3,325.

Personal Property

  • Household items and personal effects

  • Residential building materials to repair or improve home up to $3,500.

  • Jewelry, heirlooms and works of art up to $8,725.

  • Health aids.

  • Bank deposits arising out of Social Security payments up to $3,500 for a single payee ($5,250 for husband and wife payees) and unlimited if funds are not commingled; bank deposits from other public benefit payments up to $1,750 ($2,600 for husband and wife as joint payees).

  • Personal injury and wrongful death causes of action and recoveries that are necessary for support.

  • Cemetery and burial plot.


  • 75% of wages paid within 30 days prior to filing bankruptcy.

  • Public employee vacation credits (at least 75% if receiving installment payments).

Retirement & Pensions

  • Tax-exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing, and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).

  • IRAS and Roth IRAs (limits apply) - 11 U.S.C. § 522(b)(3)(C)(n). (This amount is set by federal law.

  • Public retirement benefits.

  • Private retirement plans and benefits, including IRA and Keogh.

Public Benefits

  • Unemployment and disability benefits, and union benefits due to labor disputes.

  • Workers' compensation benefits.

  • Public assistance benefits.

  • Relocation benefits.

  • Student financial aid.

Tools of Trade

  • Tools, implements, materials, books, uniforms, instruments, one commercial vehicle, equipment, and furnishings up to $8,725 total, or up to $17,450 if used by both spouses in the same occupation.


  • Matured life insurance benefits needed for support of unlimited value, or unmatured life insurance policy up to $13,975.

  • Disability or health insurance benefits.

  • Homeowners' insurance proceeds for six months after received, up the to amount of homestead exemption.

  • Fidelity bonds.

  • Life insurance proceeds if policy prohibits use to pay creditors.


  • Business or professional licenses.

  • Trust funds of inmates up to $1,600.

  • Property of business partnership -.

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